On Tuesday, silver prices remained under pressure, although they stayed within a consolidation zone.
Expectations of tighter monetary policy across major economies kept global bond yields elevated. Resilient economic activity, inflation concerns and elevated oil prices reinforce central bank policy tightening bets, creating a challenging environment for non-yielding assets.
In the US, markets currently assign around a 60% probability to a Federal Reserve interest rate increase in September, supporting both Treasury yields and the dollar and weighing on silver. Inflation data due later this week will be crucial in shaping market expectations. Any upside surprise could strengthen the case for a hawkish stance from the central bank, pressuring the metal.
Similar pressures are emerging elsewhere. The European Central Bank is expected to raise interest rates on Thursday, with another possible increase to follow before the end of the year. Meanwhile, stronger-than-expected economic data has reinforced expectations of further tightening by the Bank of Japan.
Geopolitics remains an important variable. Elevated oil prices could eventually weaken global growth and industrial activity, creating an additional headwind for silver. However, demand from the AI infrastructure buildout, electrification, and renewable energy remains resilient
Leave a Comment